IRAN: Basic Income Might Become Means Tested

Iran has had a nationwide basic income in place for the past year. It was introduced in the autumn of 2010 to replace inefficient subsidies of fuel and other commodities that had been in place for decades. The basic income was designed to cushion the blow of increased prices.

After a year of operation, the government is finding it necessary to lower the cost of the basic income and is considering means testing as one option. The plan would make the highest income-earners ineligible for the transfer. The number under consideration is 10 million people, or about 14 percent of the 74 million who currently receive the transfer.

The initial transfer amount (per person) was set much too high relative to the money saved from the elimination of subsidies, although understandable from a social and (short-term) political standpoint. That mismatch wreaked havoc with the finances of the program since nearly all of the net revenues generated from price increases went to households in transfers when their share was supposed to be 50 percent according to the Targeting Subsidies Law of January 2010. The other 50 percent was supposed to be divided between government spending and the business sector, which also suffered when the fuel subsidies were eliminated. The business sector got little of the 30 percent share allocated to them, and the government got none of the 20 percent share it had been allocated for improvement of infrastructure.

There is another problem that means testing might address. Whatever the level of funds available for transfer to households, there is a tradeoff between coverage and the amount of the transfer per person. If the rich are getting it, the lower income people will have less. That is the real dilemma now. The idea is to exclude some of the better off so that the amount of the transfer can be raised for the rest. Additional revenues are also expected from further cuts in subsidies in the second stage of the reform that is slated to begin in a few months.

The initial plan is to ask higher income earners to opt out voluntarily. Households with income above a couple of thousand dollars a month (a fairly large amount of money in Iran) will receive a letter from the government urging them to withdraw from the program voluntarily. No one knows how the recipients will respond. If enough of them agree to withdraw, the matter will have been settled. If not, the government will have to decide how to proceed. The sad fact of the matter is that at the moment the funds going to the rich are entirely at the expense of those with lower income.

About Karl Widerquist

Karl Widerquist has written 907 articles.

Karl Widerquist is an Associate Professor of political philosophy at SFS-Qatar, Georgetown University, specializing in distributive justice—the ethics of who has what. Much of his work involves Universal Basic Income (UBI). He is a co-founder of the U.S. Basic Income Guarantee Network (USBIG). He served as co-chair of the Basic Income Earth Network (BIEN) for 7 years, and now serves as vice-chair. He was the Editor of the USBIG NewsFlash for 15 years and of the BIEN NewsFlash for 4 years. He is a cofounder of BIEN’s news website, Basic Income News, the main source of just-the-facts reporting on UBI worldwide. He is a cofounder and editor of the journal Basic Income Studies, the only academic journal devoted to research on UBI.
Widerquist has published several books and many articles on UBI both in academic journals and in the popular media. He has appeared on or been quoted by many major media outlets, such as NPR’s On Point, NPR’s Marketplace, PRI’s the World, CNBC, Al-Jazeera, 538, Vice, Dissent, the New York Times, Forbes, the Financial Times, and the Atlantic Monthly, which called him “a leader of the worldwide basic income movement.”
Widerquist holds two doctorates—one in Political Theory form Oxford University (2006) and one in Economics from the City University of New York (1996). He has published seven books, including Prehistoric Myths in Modern Political Philosophy (Edinburgh University Press 2017, coauthored by Grant S. McCall) and Independence, Propertylessness, and Basic Income: A Theory of Freedom as the Power to Say No (Palgrave Macmillan 2013). He has published more than a twenty scholarly articles and book chapters.
Most Karl Widerquist’s writing is available on his “Selected Works” website (works.bepress.com/widerquist/). More information about him is available on his BIEN profile and on Wikipedia. He writes the blog "the Indepentarian" for Basic Income News.

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